LPL Financial (LPLA) AI Stock Analysis

• Market Cap: $29.79B
• Dividend Yield: 0.32%
• Average Volume (3M): 613.34K
• Price to Earnings (P/E): 25.8
• Beta (1Y): 1.02
• Revenue Growth: 26.32%
• EPS Growth: 8.63%
• Country: US
• Employees: 9,118
• Sector: Financial
• Sector Strength: 82
• Industry: Financial - Capital Markets
• EPS (TTM): 5.15
• Shares Outstanding: 79,975,716
• 10 Day Avg. Volume: 606,243
• 30 Day Avg. Volume: 613,342
• PEG Ratio: 4.68
• Price to Book (P/B): 9.20
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -101.16
• Enterprise Value/Market Cap: 1.13
• Enterprise Value/Revenue: 0.77
• Enterprise Value/Gross Profit: 9.03
• Enterprise Value/Ebitda: 3.65
• 1Y Price Target: $409.11
• Price Target Upside: 9.83% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 11

• Rating: 80 Outperform
• Price Target: $414.00 ▲( 11.14% Upside)

LPL Financial receives a strong overall score driven by robust financial performance and strategic growth initiatives. The company's solid revenue growth, strong equity position, and successful acquisitions contribute significantly to its positive outlook. While technical indicators suggest bullish momentum, careful attention to cash flow management and market conditions is advised due to potential liquidity challenges and competitive pressures.

Positive Factors

Acquisition Impact

The acquisition of Commonwealth Financial Network for $2.7B is expected to enhance LPLA's scale and competitive position in the market.

Earnings

LPL continued its long record of earnings beats with adjusted EPS of $5.15 in the quarter, which was above consensus.

Growth Initiatives

LPLA executing on growth initiatives and expense discipline, despite integrating several acquisitions, complexity around large mandate wins, and increasing advisor recruiting efforts.

Negative Factors

Financial Impact

Substantial onboarding and integration costs are expected, totaling approximately $485M, which will impact financials in the short term.

Share Repurchases

Share repurchases will be on hold in the near term due to the increased leverage ratio following the acquisition.

LPL Financial Business Overview & Revenue Model

Company Description

LPL Financial Holdings Inc., together with its subsidiaries, provides an integrated platform of brokerage and investment advisory services to independent financial advisors and financial advisors at financial institutions in the United States. Its brokerage offerings include variable and fixed annuities, mutual funds, equities, retirement and education savings plans, fixed income, and insurance, as well as alternative investments, such as non-traded real estate investment trusts and auction rate notes. The company also provides advisory platforms that provide access to mutual funds, exchange-traded funds, stocks, bonds, certain option strategies, unit investment trusts, and institutional money managers and no-load multi-manager variable annuities. In addition, it offers money market programs; and retirement solutions for commission-and fee-based services that allow advisors to provide brokerage services, consultation, and advice to retirement plan sponsors. Further, the company provides other services comprising tools and services that enable advisors to maintain and grow their practices; trust, investment management oversight, and custodial services to trusts for estates and families, as well as insurance brokerage general agency services; and technology products, such as proposal generation, investment analytics, and portfolio modeling. The company was formerly known as LPL Investment Holdings Inc. and changed its name to LPL Financial Holdings Inc. in June 2012. LPL Financial Holdings Inc. was founded in 1989 and is based in San Diego, California.

How the Company Makes Money

LPL Financial generates revenue primarily through fees and commissions associated with the advisory and brokerage services it provides. The company earns asset-based fees from advisory services and margin interest, which are charged based on the assets managed or held in client accounts. Additionally, LPL Financial receives commission revenue from transactions executed on behalf of clients. The company also benefits from partner relationships, including revenue-sharing agreements with mutual fund firms, insurance companies, and other financial product providers. These partnerships contribute to LPL's earnings by providing access to a wide range of financial products that advisors offer to their clients. Furthermore, LPL Financial generates income from interest on client cash balances and other ancillary services.

LPL Financial Financial Statement Overview

Summary

LPL Financial demonstrates strong revenue growth and profitability, supported by a robust balance sheet with no debt and increasing equity. However, cash flow metrics suggest potential liquidity challenges due to increased capital expenditures. While the company is on a solid growth trajectory, attention to cash flow management will be crucial to sustaining long-term financial health.

Income Statement

LPL Financial has shown impressive revenue growth over the years, with a significant increase from $2.35 billion in 2021 to $12.39 billion in 2024. Gross profit margin stands strong at 90.0% for 2024, indicating efficient cost management. However, the net profit margin slightly decreased from 10.6% in 2023 to 8.5% in 2024, suggesting increased expenses or cost pressures impacting net profitability. Overall, the income statement reveals robust growth and solid profitability metrics.

Balance Sheet

The balance sheet shows a healthy improvement in equity, with stockholders' equity rising from $2.08 billion in 2023 to $2.93 billion in 2024. The debt-to-equity ratio improved significantly as total debt was eliminated by 2024. ROE is strong at 36.1% for 2024, reflecting effective utilization of equity in generating profits. The equity ratio at 22.0% indicates a moderate reliance on equity financing. Overall, the balance sheet is stable with a strong equity position and reduced debt levels.

Cash Flow

Cash flow analysis reveals a concerning decline in free cash flow from $109.3 million in 2023 to -$284.9 million in 2024, primarily due to a significant increase in capital expenditures. The operating cash flow to net income ratio decreased as well, indicating less cash generation relative to earnings. Despite these challenges, the company has effectively managed operating cash flows historically. Overall, the cash flow situation shows potential strain due to high capital investments.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
12.39B	10.05B	3.06B	2.35B	2.00B
	Gross Profit
3.37B	3.05B	1.95B	1.35B	1.10B
	EBIT
1.77B	1.63B	1.24B	601.33M	626.07M
	EBITDA
2.11B	1.99B	1.53B	832.02M	908.93M
	Net Income Common Stockholders
1.06B	1.07B	845.70M	459.87M	472.64M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.01B	541.76M	847.52M	495.25M	808.61M
	Total Assets
13.32B	10.39B	9.48B	7.99B	6.52B
	Total Debt
5.75B	3.96B	2.72B	2.81B	2.59B
	Net Debt
4.78B	3.50B	1.87B	2.32B	1.78B
	Total Liabilities
10.39B	8.31B	7.31B	6.32B	5.21B
	Stockholders Equity
2.93B	2.08B	2.17B	1.67B	1.31B
Cash Flow		Free Cash Flow
-284.94M	109.33M	1.64B	237.15M	634.41M
	Operating Cash Flow
277.59M	512.61M	1.95B	453.13M	789.94M
	Investing Cash Flow
-1.59B	-860.19M	-376.40M	-458.64M	-187.50M
	Financing Cash Flow
1.42B	-208.53M	-504.27M	278.84M	-275.19M

LPL Financial Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 372.50
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LPLA, the sentiment is Positive. The current price of 372.5 is above the 20-day moving average (MA) of 355.98, above the 50-day MA of 333.21, and above the 200-day MA of 303.22, indicating a bullish trend. The MACD of 15.79 indicates Negative momentum. The RSI at 63.01 is Neutral, neither overbought nor oversold. The STOCH value of 44.64 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LPLA.

LPL Financial Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TW	80 Outperform	$34.43B	59.82	9.14%	0.29%	28.86%	29.26%
LPLA	80 Outperform	$29.79B	25.78	40.36%	0.32%	26.32%	8.63%
MKTX	75 Outperform	$8.17B	37.83	16.25%	1.37%	7.22%	-15.53%
RJF	73 Outperform	$29.32B	14.00	18.84%	1.31%	11.79%	25.74%
SF	69 Neutral	$9.57B	17.75	11.48%	1.85%	12.85%	20.21%
Sector *	64 Neutral	$12.67B	9.74	7.58%	17015.08%	12.21%	-6.96%
JEF	59 Neutral	$9.99B	16.78	6.38%	2.89%	16.62%	139.24%

LPL Financial Corporate Events

LPL Financial Stockholders Approve Key Proposals at Annual Meeting

On May 22, 2025, LPL Financial held its annual meeting of stockholders where several key proposals were voted on. The stockholders elected ten nominees to serve as directors until the 2026 annual meeting, ratified Deloitte & Touche LLP as the independent registered public accounting firm for the current fiscal year, and approved the executive compensation on an advisory basis.

The most recent analyst rating on (LPLA) stock is a Buy with a $405.00 price target. To see the full list of analyst forecasts on LPL Financial stock, see the LPLA Stock Forecast page.

LPL Financial Announces Acquisition of Commonwealth Network

On March 28, 2025, LPL Financial Holdings Inc. announced its agreement to acquire Commonwealth Financial Network for $2.7 billion in cash. This acquisition, expected to close in the second half of 2025, will integrate Commonwealth’s 2,900 independent advisors managing $285 billion in assets into LPL’s network. The move aims to enhance LPL’s service offerings and expand its market presence in the wealth management industry. Commonwealth’s CEO will join LPL’s Management Committee, and the company will retain its brand while benefiting from LPL’s scale and resources.